CHAPTER – I

INTRODUCTION

1
 Chapter – I
Introduction

Portfolio management is a concept, which made its advent in the aftermath of world

war-II when the instability in the stock markets had ruined the fortunes of individuals, companies

and even government. It was then discovered that investing in various scrips instead of putting

all the moneys in simple securities yielded better returns with low risk %. Harry Markowitz,

1991 noble prize laurite is said to have pioneered the concept of combining high yielding

securities achieving optimum Co-relation and co-efficient of shares.

Portfolio management refers to the management of portfolio for others by professional

investment managers or portfolio manager .It refers to the management of an investor’s

individual portfolio by professionally qualified persons ranging from a merchant banker to a

specialized portfolio company.

Investment positions are undertaken with the goal of earning some expected rate of

return. Investors seek to minimize inefficient deviations from this expected rate of return.

Diversification is essential to the creation of an efficient investment because it can reduce the

variability of returns around the expected return.

2
 The portfolio manager seeking efficient investments works with two kinds of statistics

– expected return statistics and risk statistics. The expected return and risk statistics for

individual assets are the exogenously determined input data analyzed by the portfolio analyst.

The objective of portfolio analysis is to develop a portfolio that has the maximum return at

whatever level of risk the investor deems appropriate. All information available to the securities

analyst is supposed to be summarized in the risk-return statistics describing the investment

candidates.

Expected return from individual securities carries some degree of risk. Risk is

defined as the standard deviation around the expected return. In effect a security’s risk with the

variability of its return. More dispersion or variability about a security’s expected return meant

the security was riskier than one with less dispersion.

3
OBJECTIVES OF THE STUDY:

The following study is conducted with the below objectives:-

 To study the meaning and definition of portfolio management
 To study the role of portfolio manager in portfolio management
 To study the relation of risk and return in portfolio management

Research Methodology: -

Primary data:

The primary data information is gathered from Anandrathi by interviewing their executives.

Secondary data:

The secondary data is collected from various financial books, magazines and from stock lists of
various newspapers and Anandrathi as part of the training class undertaken for project.

4
NEED FOR THE STUDY

Portfolio management has emerged as a separate academic discipline in India. Portfolio theory that
deals with the rational investment decision-making process has now become an integral part of financial
literature.

SCOPE AND PERIOD OF STUDY:

The study covers the calculation of correlations between the different securities in order

to find out at what percentage funds should be invested among the companies in the portfolio.

Also the study includes the calculation of individual Standard Deviation of securities and ends at

the calculation of weights of individual securities involved in the portfolio. These percentages

help in allocating the funds available for investment based on risky portfolios.

5
Limitations of the Study:

1. This study is restricted to the Anandrathi .

2. The study suffered from the time factor, the given time for the study is very limited, it
is not sufficient for the researcher to gather all the data. .
3. Hence the findings and conclusions drawn therein, cannot be expected to be same else
where.
4. The data is to be collected from the corporate offices is assumed to be very correct.

Therefore the above limitations have to be taken into account while considering the findings of
the study for the policy decision. In other words, the information brought out in the present
study is only indicative and might not hold true for the entire population.

6
 CHAPTER – II
REVIEW OF LITERATURE

7
 REVIEW OF LITERATURE

Investment may be defined as an activity that commits funds in any financial form in the present
with an expectation of receiving additional return in the future. The expectations bring with it a
probability that the quantum of return may vary from a minimum to a maximum. This possibility of
variation in the actual return is known as investment risk. Thus every investment involves a return and
risk.

Investment is an activity that is undertaken by those who have savings. Savings can be defined as
the excess of income over expenditure. An investor earns/expects to earn additional monetary value
from the mode of investment that could be in the form of financial assets.

 The three important characteristics of any financial asset are:

Return-the potential return possible from an asset.

 Risk-the variability in returns of the asset form the chances of its value going down/up.

 Liquidity-the ease with which an asset can be converted into cash.

Investors tend to look at these three characteristics while deciding on their individual preference
pattern of investments. Each financial asset will have a certain level of each of these characteristics.

8
 Investment avenues
There are a large number of investment avenues for savers in India. Some of them are
marketable and liquid, while others are non-marketable. Some of them are highly risky while some
others are almost risk less.
Investment avenues can be broadly categorized under the following head.

1. Corporate securities
2. Equity shares.
3. Preference shares.
4. Debentures/Bonds.
5. Derivatives.
6. Others.

Corporate Securities

Joint stock companies in the private sector issue corporate securities. These include equity
shares, preference shares, and debentures. Equity shares have variable dividend and hence belong to the
high risk-high return category; preference shares and debentures have fixed returns with lower risk.The
classification of corporate securities that can be chosen as investment avenues can be depicted as shown
below:

Equity Preference Bonds Warrants Derivatives

Shares shares

9
CONCEPT OF PORTFOLIO DIVERSIFICATION
Efforts to spread and minimize risk take the form of diversification the more

traditional forms of diversification have concentrated upon holding a number of security types

(stock, bonds) across industry lines (utility, mining, manufacturing groups). The reasons are

related to inherent differences in bond and equity contracts, coupled with the notion that an

investment in firms in dissimilar industries would most likely do better than in firms with in the

same industry. Holding one stock each from mining, utility, and manufacturing groups is

superior to holding three mining stocks. Carried to its extreme, this approach leads to the

conclusion that the best diversification comes through holding large numbers of securities

scattered across industries.

A combination of securities that have risk and return features which make up a portfolio.

Portfolio selection involves choosing the best portfolio to build a risk return preference of a

portfolio investor.

Management of portfolio is a dynamic activity of evaluating and revising the portfolio in terms

of its objectives. It is widely accepted that individual scrip’s carry a certain degree of risk.

Diversification can be classified in to two types

 Vertical diversification

 Horizontal diversification

In vertical diversification a portfolio can have scrip’s of different companies with in the same

industry. In horizontal diversification one can have different scrip’s chosen from different

industries.

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Examples of vertical diversification

CEMENT INDUSTRY

Acc Ltd

L & t cement

Birla cement

Vishnu cement

Priya cement

Ramco cement

TEXTILES

Garden silk mills

Reliance industries

Grasim industries

Bombay industries

Nepc industries

Examples of horizontal diversification

Tisco ltd

Acc ltd(cement)

Bses ltd(power)

Traditional approach advocates that the more securities one holds the better it is according to

modern approach diversification should not be quantified but should be related to the quality of

scrip’s which leads to quality of portfolio. Experience has shown that a beyond a certain number

of securities additional more securities become expensive. An efficient portfolio is one, which is

11
fully diversified for any given rate of return; no other portfolio has a lesser risk. And for a given

risk, no other portfolio has higher returns. Individual investors who have no access to

information who are not prudent enough in their investment judgment would certainly bank on

portfolio managers to do the jobs for themselves.

RISK

It refers to the chance of injury, damage or loosen investment decision the loss or risk is reflected

in terms of finance which may arise due to various factors related to investors, company,

industry to which the company belongs domestic economy or international economy.

Risk has two components:

Market Risk or Systematic Risk

Specific Risk or Unsystematic Risk

Market risk is a systematic risk caused by an investor’s reaction to tangible intangible events

uncontrollable external and wider forces are elements of systematic risk.

Controllable internal factors peculiar to a particular industry are the elements of unsystematic

risk. Specific risks are a part of total risk independent of market movement.

Portfolio risk consists of market risk, which is weighted average of market risk of individual

shares in the portfolio along with the specific risk. The specific risk of a portfolio declines as a

portfolio becomes more diversified because specific risk of different stock tend to balance out

each other.

Examples of systematic risks

Market risk: this arises out of changes in demand and supply pressures in the markets,

following the changing flow of information or expectations. The totality of investor perception

12
and subjective factors influence the events in the market which are unpredictable and give rise to

risk, which is not controllable.

Interest rate risk: The return on investment depends on the interest rate promised on it and

changes in market rates of interest from time to time .the cost of funds borrowed by a companies

or stock brokers depends on interest rates .these interest rates depends on nature of instruments,

stocks, bonds, loans etc maturity of periods and the creditworthiness of the issuer of securities.

Purchasing power risk: Inflation or rise in prices lead to rise in costs of production, lower

margins, wage rising and profit squeezing etc. The return expected by investors will change due

to change in real value of returns. Cost push inflation is caused by rise in costs, due to wage rise

or rise in input prices .demand pull forces operate to increase prices due to inadequate supplies

and rising demand .the increase in demand may be caused by changing expectation of future

interest rates and inflation or due to increase in money supply or creation of currency to finance

the deficit of government.

Examples of unsystematic risk

Business risk: this relates to the variability of the business; sales, income,

Profits etc which in turn depends on the market conditions for the product mix

Input supplies, strength of competitors, etc. This business risk is sometimes external to the

company due to changes in government policy or strategies of competitors or unforeseen market

conditions. They may be internal due to fall in production ,labor problems, raw material

problems or inadequate supply of electricity etc. the internal business risk leads to fall in

revenues and in profit of the company but can be corrected by the changes in the companies

policies.

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Financial risk: this relates to the method of financing, adopted by the company, high leverage

lending to larger debt servicing problem or short term liquidity problem due to bad debts,

delayed receivables and fall in current assets or rise in current liabilities .this problem could no

doubt be solved, but they may lead to fluctuations in earnings, profits and dividends to

shareholders.

Default or insolvency risk: the borrower or issuer of securities may become insolvent or may

default, or delay the payments due, such as interest installments or principal repayments. The

borrower credit rating might have fallen suddenly and he became default prone and in its

extreme form it may lead to insolvency and bankruptcies.

RISK- RETURN RELATIONSHIP

1. Risk: Risk is inherent in any investment. Some investments are almost risk less like

Government securities or Bank deposits; they are more risky. There are differences in risk as

between instruments.

2. Return: Yield or return differs from the nature of instruments, maturity period and the

creditor or debtor nature of the instrument and host of other factors. The most important factor

influencing return is risk. Normally the higher the risk higher is the return.

RISK AND DECISION MAKING

Portfolio managers should always try to minimize the risk and make best selection of assets in

which funds are to be invested .the factors that governs such decision making are

1. Rate of return and frequency of return

2. Degree of risk and coverage of risk

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 3. Inflation

4. Growth rate

5. Funds requirements

6. Tax exemption and benefits

7. Speculation

8. Security

9. Liquidity and marketability

ANALYSIS OF PORTFOLIO

A. FUNDAMENTAL APPROACH

It is based on intrinsic value of share, intrinsic value is nothing but face value matches with

performance value.

B.TECHNICAL APPROACH

It is based on Dow Jones theory; random walk theory. Prices are based on supply and demand

in the market

C.TRADITIONAL APPROACH

It assumes that objective of any stock market are

 Maximization of wealth and minimization of risk

 Diversification reduces risk and volatility

 Investment decision covers various alternatives balanced between fixed and variable

return, high growth company, high returns, high liquidity, etc.

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CAPM (CAPITAL ASSET PRICING MODEL)

It pays more weight age to risk and highlights the difference between the risk

Of holding a security and the risk of holding a portfolio.

The following rules must be studied a cautious portfolio manager before deciding to invest their

funds on investment.

 Compile the financial statement of the company in immediate past three years, turnover,

profit after tax.

 Compare the profit earnings of the company with that of the industry average, nature of

the product manufactured or service rendered and its future demand; know about the

promoter and their background, dividend track record and bonus issue in the past 3-5

years.

 Watch out the highs and lows of the scrip’s for the past 2-3 years and their timings.

 Untraceable shares must find a large place in the kitty of your portfolio; leave alone the

return even the capital investment is eroded with no way of exit sight.

Fundamental analysis:

The primary motive of buying a share is to sell it subsequently at a higher price.

A investor who would like to be rational and scientific in his investment activity has to evaluate

a lot of information about the past performance and the expected future performance of

companies, industries and economy as a whole before taking the investment decision. Such

evaluation or analysis is called fundamental analysis.

16
Meaning of fundamental analysis:

Fundamental analysis is really logical and systematic approach to estimating the future dividends

and share price it is based on the basic premise that share price is determine by number of

fundamental factors relating to economy, industry and company. Hence economy fundamentals,

industry fundamentals and company fundamentals have to be considered while analyzing a

security for investment purpose. Fundamental analysis is, in other words, a detail analysis of

fundamental factors affecting the performance of the companies.

The purpose of fundamental analysis is to evaluate the present and future earning capacity of a

share based on the economy, industry and company fundamentals and thereby assess the

intrinsic value of share. The investor can then compare the intrinsic value of share with

prevailing market price to arrive at investment decision. If the market price of the share is lower

than intrinsic value, the investor would decide to buy the share as it is under priced .the price of

such a share is expected to move up in future to match with its intrinsic value.

On the contrary the market price of the share is higher than its intrinsic value, it is perceived

to be overpriced. The market price of such a share is expected to come down in future and hence

the investor would decide to sell such share.

Fundamental analysis thus provides an analytical framework for rational investment decision

making. This analytical framework is known as E-I-C framework, or economy- industry-

company analysis.

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ECONOMY-INDUSTRY-COMPANY ANALYSIS FRAMEWORK

The analysis of economy, industry and company fundamentals constitute the main activity of

fundamental approach to security analysis. A company belongs to an industry and the industry

operates with in the economy. As such, industry and economy factors affect the performance of

the company.

The multitude of factors affecting the performance of a company can be broadly classified as:

Economy- wide factors such as growth rate of the economy, inflation rate, foreign exchange

rates, etc which affect all companies.

Industry-wide factors such as demand-supply gap in the industry, the emergence of substitute

products, changes in government policy relating to industry, etc. These factors affect only those

companies belonging to a specific industry.

Company-specific factors such as age of its plant, the quality of management, brand image of its

product, its labor management relations, etc. these factors are likely to make a company’s

performance quite different from that of its competitors in the same industry.

Fundamental analysis involves three steps:

 economy analysis

 industry analysis

 company analysis

ECONOMY ANALYSIS

The performance of a company depends on the performance of economy. If the economy is

booming, income rise and demand for goods will increase, the industry and company in general

tend to be prosperous. On the other hand if the economy is in recession, the performance of the

companies will be bad. Investors are concerned with those variables in the economy which affect

18
the performance of the company in which they tend to invest. The key economic variables that

an investor must monitor as part of his fundamental analysis.

Growth rates of national income

The rate of growth of national economy is an important variable to be considered by an investor.

GNP (gross national product) NNP (net national product) and GDP (gross domestic product) are

the different measures of total income or total economic out put as a whole. The growth rates of

this measure indicate the growth rate of the economy. The estimates of GNP, NNP and GDP and

their growth rates are made available by government from time to time.

Inflation: Inflation prevailing in the economy has considerable impact on the performance of the

companies. Higher rates of the inflation upset business plans, lead to cost escalation and result in

squeeze on profit margins. On the other hand, inflation leads to erosion of purchasing power in

the hands of consumers. This will result in lower demand for products. Thus high rates of

inflation in an economy are likely to affect the performance of companies adversely. Industries

and companies propel during the times of low inflation.

Interest rates: Interest rates determine the cost and availability of credit for companies operating

in the economy. Low interest rates stimulate investment by making credit available easily and

cheaply. Moreover it implies lower cost of finance for companies and thereby assures higher

profitability. On the contrary results in high cost of production which may lead to lower

profitability and lower demand.

Government revenue, expenditure and deficit:

As the government is largest investor and spender of money, the trends in government revenue,

expenditure and deficit have significant impact on the performance of the industries and

companies. Expenditure by government stimulates the economy by creating jobs and generating

19
demands. However the government expenditure exceeds its revenue, there occurs a deficit. This

deficit is known as budget deficit.

Exchange rates:

The performance and profitability of the industries and companies that are major importers or

exporters are considerably affected by the exchange rates of the rupee against major currencies in

the world. The exchange rates of rupee are influenced by the balance of trade deficit, the balance

of payments deficit and also the foreign exchange reserves of the country.

INDUSTRY ANALYSIS:

An investor ultimately invests his money in securities of one or more specific companies. Each

company can be characterized as belonging to an industry. The performance of companies

would, therefore, be influenced by the fortunes of the industry to which it belongs.

SOFTWARE INDUSTRY

In the course of the last decade India’s it software industry has scripted one of the most amazing

success stories .This Rs 60000 crores industry has not only contributed very substantially to

India’s burgeoning forex reserves and to employment but has radically altered the country image

and standing in the 4 comity of nations. Today many of the challenges it faces are the

consequences of problems that others would quite like to have – the problems of success. Yet

there is one challenge that reflects a failure; the challenge of accelerating growth of the domestic

market for software. Last year software exports increase by 26% amazing growth in the

ambience of a global economic slowdown. However the domestic software market grew by only

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13%, to Rs 120060 crores, just about fourth of the exports for the last year. This despite of the

robust increase in GDP, averaging well over 5% a year over the last few years.

PHARMA INDUSTRY

The pharmaceutical industry is a knowledge driven industry and is heavily dependent on

Research and Development for new products and growth. However, basic research (discovering

new molecules) is a time consuming and expensive process and is thus, dominated by large

global multinationals. Indian companies have recently entered the area and initial results have

been encouraging.

Patents play an important role in encouraging Research and Development. The new WTO rules

imply that India will have to switch to a product patent regime post 2022 from its current process

patent regime. This would alter the scenario in the Indian market over the next 10-21 years.

In the global pharmaceutical market, western markets are the largest and fastest growing due to

introduction of newer molecules at high prices. A well-established reimbursement and insurance

system implies that per capita drug expenditure is abnormally high in Western Countries as

compared to the developing nations.

The Indian pharmaceutical industry is highly fragmented, but has grown rapidly due to the

friendly patent regime and low cost manufacturing structure. Intense competition, high volumes

and low prices characterize the Indian domestic market. Exports have been rising at around 30%

CAGR over last five years. There is a shift in export profile towards value added formulations

from low value bulk drugs.

The Drug Pricing Control Order (DPCO) has been the millstone around the neck of Indian

industry as it has severely restricted profitability and hence innovation. However, the

21
government has been relaxing controls in a slow but progressive manner. The span of control of

DPCO has come down from 90% in 1980s to 50% in 1995 and is likely to be further reduced as

per the latest proposed changes.

In the domestic market, old and mature categories like anti- infective, vitamins, analgesics are

degrading or stagnating while new lifestyle categories like cardiovascular, CNS, anti diabetic are

growing at double-digit rates. The growth of a company in the domestic market is thus critically

dependent on its therapeutic presence.

CEMENT INDUSTRY

Cement industry is one of the most advanced industries in the country. After the complete

decontrol of price and distribution in March 1989 and introduction of other policy reforms, the

cement industry has made rapid strides both in capacity/production and process technology. As

on 30 April 2021, there were 124 large cement plants with an installed capacity of 137.03 million

tones per annum. Besides, there are more than 300 mini cement plants with an estimated capacity

of 11.10 million tones per annum. The production during 2021-2022 was 106.90 million tones

with a growth rate of 9.52%.

The cement industry has kept pace with technological advancement and modernization. Export

of cement 5.14 million tones (provisional)2021-2022.improvement in the quality of Indian

cement has found it’s ready markets in Bangladesh, Indonesia, Malaysia, Nepal, middle east

countries, Burma, Africa and south east Asian countries.

22
 CHAPTER – III
COMPANY PROFILE

23
 INDUSTRY PROFILE
BOMBAY STOCK EXCHANGE:

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage.

Popularly known as "BSE", it was established as "The Native Share & Stock Brokers

Association" in 1875. BSE has played a pioneering role in the Indian Securities Market - one of

the oldest in the world. Much before actual legislations were enacted, BSE had formulated

comprehensive set of Rules and Regulations for the Indian Capital Markets. It also laid down

best practices adopted by the Indian Capital Markets after India gained its Independence.

BSE is the first stock exchange in the country to obtain permanent recognition in 1956 from

the Government of India under the Securities Contracts (Regulation) Act, 1956. The base year of

SENSEX is 1978-79. From September 2003, the SENSEX is calculated on a free-float market

capitalization methodology. The "free-float Market Capitalization-Weighted" methodology is a

widely followed index construction methodology on which majority of global equity benchmarks

are based.

The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The

systems and processes of the Exchange are designed to safeguard market integrity and enhance

transparency in operations. During the year 2017-2018, the trading volumes on the Exchange

showed robust growth.

The Exchange is professionally managed under the overall direction of the Board of Directors.

The Board comprises eminent professionals, representatives of Trading Members and the

Managing Director of the Exchange. The Board is inclusive and is designed to benefit from the

participation of market intermediaries.

24
NATIONAL STOCK EXCHANGE OF INDIA LIMITED:

The National Stock Exchange of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges, which recommended
promotion of a National Stock Exchange by financial institutions (FIs) to provide access to
investors from all across the country on an equal footing. Based on the recommendations, NSE
was promoted by leading Financial Institutions at the behest of the Government of India and was
incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the
country.
On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in
April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June
1994. The Capital Market (Equities) segment commenced operations in November 1994 and
operations in Derivatives segment commenced in June 2000.The national stock exchange of
India ltd is the largest stock exchange of the country. NSE is setting the agenda for change in the
securities markets in India. For last 5 years it has played a major role in bringing investors from
347 cities and towns online, ensuring complete transparency, introducing financial guarantee to
settlements, ensuring scientifically designed and professionally managed indices and by
nurturing the dematerialization effort across the country.NSE is a complete capital market prime
mover. It’s wholly owned subsidiaries, National securities clearing corporation ltd (NSCCL)
provides cleaning and settlement of securities, India index services and products ltd (IISL)
provides indices and index services with a consulting and licensing agreement with Standard &
Poor’s (S&P), and IT ltd forms the technology strength that NSE works on.

25
 PROFILE OF THE COMPANY

Introduction:

AnandRathi (AR) is a leading full service securities firm providing the entire gamut of

financial services. The firm, founded in 1994 by Mr. AnandRathi, today has a pan India presence

as well as an international presence through offices in Dubai and Bangkok. AR provides a

breadth of financial and advisory services including wealth management, investment banking,

corporate advisory, brokerage & distribution of equities, commodities, mutual funds and

insurance - all of which are supported by powerful research teams.

The firm's philosophy is entirely client centric, with a clear focus on providing long term value

addition to clients, while maintaining the highest standards of excellence, ethics and professionalism. The

entire firm activities are divided across distinct client groups: Individuals, Private Clients, Corporates and

Institutions.

The company is also maintaining an excellent relationship with the clients, the brokers, the
employees, and the bankers.

PROFILE

COMPANY HISTORY OF THE PLACE

The Anand Rathi Securities LTD was established in the year of 1994 in Mumbai, Maharastra
state.

REGD.OFFICE (Head Office)

3rd Floor, J K Somani Building
British Hotel Lane
Mumbai Samachar Marg
Mumbai - 400 023, India.

26
 Tel: 91-22-6637 7000
Fax: 91-22-6637 7070

MANAGEMENT TEAM OF THE COMPANY

Mr. AnandRathi
Group Chairman
Mr. Pradeep Gupta
Vice Chairman
Mr. Amit Rathi
Managing Director

BRANCH OFFICE
Sri Krishna Towers,2nd Floor, CTS NO. 14
Khanapur Road, Tilakwadi,
Hyderabad
AP
Pin : 590006
Tel : 0831-4207300/ 3098234
FINANCIAL AND ADVISORY SERVICES
 Wealth management
 Investment banking
 Corporate Advisory
 Brokerage and Distribution of Equities, Commodities, Mutual Funds and Insurance
CLIENTS OR CUSTOMERS
 Individuals
 Private clients
 Corporates and
 Institutions

27
AR Core Strengths

Breadth of Services

In line with its client-centric philosophy, the firm offers to its clients the entire
spectrum of financial services ranging from brokerage services in equities and commodities,
distribution of mutual funds, IPOs and insurance products, real estate, investment banking,
merger and acquisitions, corporate finance and corporate advisory.
Clients deal with a relationship manager who leverages and brings together the product
specialists from across the firm to create an optimum solution to the client needs.

Management Team
AR brings together a highly professional core management team that comprises of
individuals with extensive business as well as industry experience.

In-Depth Research
AR’s research expertise is at the core of the value proposition that we offer to our clients.
Research teams across the firm continuously track various markets and products. The aim is
however common - to go far deeper than others, to deliver incisive insights and ideas and be
accountable for results.

Management Team
Firm’s senior Management comprises a diverse talent pool that brings together rich
experience from across industry as well as financial services.

The products/services of the Anand Rathi are as follows:

1. Individuals
(a) Private wealth management
Introduction:
Affluent individuals need sophisticated advice and strategic guidance to capitalize on
opportunities to preserve, grow and transfer their wealth. In addition, a desire exists within
wealthy families to simplify the management of multigenerational needs and lessen the profound

28
emotional impact of wealth on family members.AR offers the most extensive platform of
customized servicing, individual strategies and products to help meet the requirements of the
affluent private investor. We provide comprehensive, integrated investment strategies to address
your wealth management needs. Working closely with specialists across firm PWM offers an
array of products & services, which includes AR's highly rated research.

Philosophy:
The Anand Rathi tries and understands client’s financial needs; to offer them personal
advice and expert analysis that they need to make their assets go the Extra mile. Firm’s ability to
think far ahead and formulate a long-term strategy, coupled with long hours of practice and
research are the key drivers, which make investors wealth work harder for them. The company
believes that the key to build wealth lies in allocating assets across various markets, financial
instruments and industry sectors. Keeping this in mind the firm leverage it’s expertise in
scientific asset allocation, to help maximize returns and minimize risks.

Process:
The firm realize the need to simplify the complexities of the investment strategies and it

achieve this by offering highly customized private wealth management .The firm’s Personalized

Relationship Managers along with the expert team of analysts and advisors will assist to

investors in analyzing all their investment needs and advice them on specialized solutions

created exclusively for them.

The firm has excellent research team, who constantly screens the market for investment

prospects. The team provides support in fine-tuning the investment strategy & suggests how to

capitalize on these opportunities.

Products:
 Equity & Derivatives
 Mutual Funds
 Depository Services
 Commodities
 Insurance Broking

29
  IPOs

Research:
It’s research expertise is at the core of the value proposition that they offer to its clients.

Research teams across the firm continuously track various markets and products. The aim is

however common - to go far deeper than others, to deliver incisive insights and ideas and be

accountable for results. AR research processes incorporate quantitative areas well as qualitative

analyses. This multi-pronged approach helps us to provide superior risk- adjusted returns for our

clients.

AR analysts provide objective and decisive research that is designed to enable clients

to make informed investment decisions. The team covers entire spectrum of financial markets

from equities, fixed income, and commodities to currencies. They also cover the global markets,

to give clients an unparalleled macro-view of the investment opportunities across the globe.

b) Brokerage and distribution

Equity & Derivatives Brokerage:

AnandRathi provides end-to-end equity solutions to institutional and individual investors.

Consistent delivery of high quality advice on individual stocks, sector trends and investment

strategy has established us a competent and reliable research unit across the country.

Clients can trade through us online on BSE and NSE for both equities and derivatives.

They are supported by dedicated sales & trading teams in its trading desks across the country.

Research and investment ideas can be accessed by clients either through their designated dealers,

email, web or SMS

30
Mutual Funds:

AR is one of India's top mutual fund distribution houses. Its success lies in the firm

philosophy of providing consistently superior, independent and unbiased advice to their clients

backed by in-depth research. The AR team firmly believe in the importance of selecting

appropriate asset allocations based on the client's risk profile.

Depository Services:

AR Depository Services provides to investors with a secure and convenient way for

holding their securities on both CDSL and NSDL.The firm’s depository services include

settlement, clearing and custody of securities, registration of shares and dematerialization. It

offer to the investors daily updated internet access to their holding statement and transaction

summary.

Commodities:
Commodities broking - a whole new opportunity to hedge business risk and an attractive

investment opportunity to deliver superior returns for investors.

The firm’s commodities broking services include online futures trading through NCDEX

and MCX and depository services through CDSL. Commodities broking is supported by a

dedicated research cell that provides both technical as well as fundamental research. Its research

covers a broad range of traded commodities including precious and base metals, Oils and

Oilseeds, agri-commodities such as wheat, chana, guar, guar gum and spices such as sugar, jeera

and cotton.

In addition to transaction execution, the firm provides customized advice on hedging

strategies, investment ideas and arbitrage opportunities to clients.

31
 Insurance Broking:

As an insurance broker, AR provide to its clients comprehensive risk management

techniques, both within the business as well as on the personal front. Risk management includes

identification, measurement and assessment of the risk and handling of the risk, of which

insurance is an integral part. The firm deals with both life insurance and general insurance

products across all insurance companies. AR’s guiding philosophy is to manage the clients'

entire risk set by providing the optimal level of cover at the least possible cost. The entire sales

process and product selection is research oriented and customized to the client's needs. We lay

strong emphasis on timely claim settlement and post sales services.

AR services :

 Risk Management

 Due diligence and research on policies available

 Recommendation on a comprehensive insurance cover based on clients.

 Maintain proper records of client policies

 Assist client in paying premiums

 Continuous monitoring of client account

 Assist client in claim negotiation and settlement

IPO’s:

The firm is a leading primary market distributor across the country. Its strong

performance in IPOs has been a result of its vast experience in the Primary Market, a wide

network of branches across India, strong distribution capabilities and a dedicated research team

The firm has been consistently ranked among the top 10 distributors of IPOs on all major

32
offerings. Its IPO research team provides clients with in-depth overviews of forthcoming IPOs

as well as investment recommendations. Online filling of forms is also available.

( c) NRIs

Introduction:

AR is the perfect gateway to the wealth of investment opportunities in India for Non-

Resident Indians. With it will dedicated NRI desk in India and Relationship Managers investors

own country, investors get the best of both worlds - real understanding of their investment needs

as well on-the-ground expertise.

It provides the following services for NRIs.

 Superior understanding of the Indian economy & markets

 Ability to structure and manage your tax and regulatory compliances

 Dedicated relationship team

 Unparalleled product range - Indian and Global

2. Institutions

(a) Institutional Equities

Introduction:

The Institutional sales and trading team provides cutting edge market information and

investment advice to clients, coupled with excellent execution capabilities. A highly experienced

and reputed team of equity analysts supports the sales team. There is an extensive focus on

research on companies, sectors and macro-economy. The institutional equity team tracks nearly

250 large and mid-sized companies to give clients an unparalleled breadth of ideas.

It also provide Investment Advisory Services for institutional clients in India and

overseas for investment in the Indian equity markets

33
(b) Managed Investment services

Portfolio Management Services (PMS):

AR Portfolio Management Service is a discretionary investment service created to meet

the demand for more targeted investment styles and opportunities. It offers a range of specialized

investment strategies designed to capture opportunities across the market spectrum. The range of

products varies from the highly defensive, capital-protected to the most aggressive strategies in

the equities and derivatives markets.

The firm’s investment process ensures that investors’ strategy and portfolio are built on

solid foundations. Together clients and their relationship manager select the strategy in line with

their individual goals. AR investment specialists then construct and manage clients portfolio in

accordance with the chosen investment strategy.

Real Estate Opportunities Fund:

AR Real Estate Opportunities Fund is a private equity fund for high net-worth

individuals, corporate and institutions, to invest in equity-linked instruments in the Indian real

estate and infrastructure sectors.

As part of the structural reforms to further boost India's economic growth, the

government has recognized the need for institutional finance in the real estate sector. In early

2017, the government has relaxed the FDI guidelines in real estate and also allowed the setting

up of real estate investment funds under SEBI guidelines. These developments are expected to

provide much needed capital to provide for the increasing demand for quality real estate in major

urban centers across the country. To capture this opportunity, AR has brought together a team of

specialists and advisors to guide the fund's investments who bring together expertise in the areas

of real estate consulting, development, legal and financial structuring.

34
3. Corporate

(a) Institutional wealth management

Introduction:

Corporate and Institutional treasuries need ever more sophisticated advice that is backed

by serious and credible research. AR IWM provides its institutional clients integrated wealth

management solutions across global markets, which are backed by proprietary global economic

& investment research.

(b) Investment banking and corporate Finance

Introduction

Investment Banking:

AR Investment Banking provides comprehensive services to clients including raising

money in the equity capital markets to identifying strategic alliances, mergers and acquisition

opportunities and debt financing & restructuring advisory.

35
 Corporate Finance:

The AR Corporate Finance team helps clients manage their debt-financing needs by

profiling business and cash-flow risks, defining the alternative sources of funding , building in

multiple variables such as currencies, fixed-floating, tenure, collateral etc. in a comprehensive

manner and finally negotiating with the prospective lenders / buyers.

The team has also built an impressive track-record in debt restructuring based on its superior

understanding of business needs and relationships with key lenders.

The Corporate Finance team has handled assignments in businesses like paper, hospitality,

telecom, textiles and sugar.

Services

Investment Banking:

Merchant Banking:

A highly experienced equity capital markets team, a pan-India distribution presence and a

high level of quality and integrity in executing client's transactions has enabled us to provide

tangible value to the firm’s clients' businesses.

the firm bring quality independent advice and excellent execution capabilities to create

landmark transactions for clients. The firm’s track record of successfully lead managed IPOs

includes Tips Industries, Emami, HCL Infosystems and Provogue.

M&A, Private Equity:

The firm’s Mergers & Acquisition team works with clients in creating lasting stakeholder

value through advice on mergers, acquisitions, divestitures and private equity financing. The

team leverages on the firm's superior understanding of businesses and tax and regulatory

36
environments as well as a deep network of relationships across the professional and corporate

world.

The firm has been worked extensively with clients in industries like cement, sugar, chemicals,

power and textiles for mergers and acquisition deals, valuation and business restructuring.

(c) Corporate Advisory services

Introduction:

AnandRathi Advisors assists companies in realizing tangible improvements in various

facets of their businesses by providing a range of corporate advisory services that includes the

entire gamut from financial, organisational and operational restructuring, to profit improvement

and business turnaround strategies.

Highly qualified and thoroughly professional, its specialists, experts and associates assist

to clients in conceptualising problems and devising effective solutions, whatever be clients need.

Successful assignments undertaken for leading organisations in India as well as overseas

bear ample testimony to our wide-ranging capabilities, utilising firm’s unparalleled business

know-how to give you the competitive edge.

Services

 Performance Improvement and Cost Reduction

 Business Strategy and Re-engineering

 Financial, Business & Organizational restructuring

 Business Turn-around Strategies

 Management Systems: MIS, Review & Control Mechanism

37
(d) Cross-Border Advisory

Introduction:

Dynamic Orbits is the international interface of Anand Rathi Group, inter alia Dynamic

Orbits is engaged in building strategic alliances, outsourcing contracts, contract manufacturing

alliances, cross border joint ventures and cross border acquisitions.

38
 CHAPTER -IV

DATA ANALYSIS AND

INTERPRETATION

39
 Statistics is the art & sciences of collecting, analyzing, presenting & interpreting data.
The reason for analyzing data is to understand the variation and its cause in the phenomenon.
Since variation is present in all the phenomenon. Knowledge of it leads to better decisions about
a phenomenon the produces the data. It is from this perspective that the learning of statistics
enables the decision maker to understand how to draw conclusions about the large population
based upon information obtained from the sample. For the purpose of this research the thought
process that focuses on ways to discover, manage and decrease the variation present in all
phenomenon is statistical thinking, data is the collection of observation of variables of interest
while the population is the collection of all elements of interest.
Descriptive as well as inferential statistical methods will be used in the research. Descriptive
statistics will include graphic and numeric method.
Efficient store-keeping and inventory control in dispensable to the control of material cost.
Goods are received into the stores after inspection and they are held issued to production as and
when required. The store department rendering service departments and the accounts
departments.

40
CALCULATION OF AVERAGE RETURN OF COMPANIES:
_
Average Return (R) = (R)/N
(P0) = Opening price of the share
(P1) = Closing price of the share
D = Dividend
WIPRO:

D+(P1-P0)/
Year (P0) (P1) D (P1-P0) P0*100
2017-2018 1,700.60 1233.45 1 -467.15 -27.41
2018-2019 1,233.45 1361.20 29 127.75 12.71
2019-2020 1,361.20 2,012 5 650.8 48.16
2020-2021 2021 1900.75 5 -201.25 -21.84
2021-2022 1900.75 1900.45 8 -0.3 1.38

TOTAL RETURN 19

Average Return = 19/5 = 3.8

ITC LTD:

D+(P1-P0)/
Year (P0) (P1) D (P1-P0) P0*100
2017-2018 696.70 628.25 15 -68.45 -7.67
2018-2019 628.25 1043.10 20 414.85 69.25
2019-2020 1043.10 1342.05 31.8 298.95 31.7
2020-2021 1342.05 2932 2.65 1589.95 118.67
2021-2022 2932 2976 3.1 44 1.61

TOTAL RETURN 213.5

Average Return = 213.5/5 =42.702

41
DR REDDY LABORATORIES LTD:

D+(P1-P0)/
Year (P0) (P1) D (P1-P0) P0*100
2017-2018 1090.95 916.30 5 -174.65 -21.55
2018-2019 916.30 974.35 5 58.2 6.89
2019-2020 974.35 739.15 5 23.52 -23.63
2020-2021 739.15 1,421.40 5 682.25 92.98
2021-2022 1,421.40 1456.55 3.75 35.15 2.74

TOTAL RETURN 63.43

Average Return = 63.43/5 = 12.67

ACC:

D+(P1-P0)/
Year (P0) (P1) D (P1-P0) P0*100
2017-2018 153.40 138.50 2.5 -17.19 -8.08
2018-2019 138.50 254.65 4 116.15 86.71
2019-2020 254.65 360.55 7 105.9 44.34
2020-2021 360.55 782.20 8 421.61 119.19
2021-2022 782.20 735.25 25 -46.95 -2.8

TOTAL RETURN 239.35

Average Return = 239.35/5 = 47.87

42
BHARAT HEAVY ELECTRICALS LTD:

D+(P1-P0)/
Year (P0) (P1) D (P1-P0) P0*100
2017-2018 169.00 223.15 4 54.15 34.4
2018-2019 223.15 604.35 9.5 38.12 175.08
2019-2020 604.35 766.40 8.5 162.05 28.2
2020-2021 766.40 2241.95 10.5 1475.55 193.9
2021-2022 2241.95 2261.35 18.5 19.4 1.69

TOTAL RETURN 433.27

Average Return = 433.27/5 = 86.65

HEROHONDA AUTOMOBILES LIMITED:

D+(P1-P0)/
Year (P0) (P1) D (P1-P0) P0*100
2017-2018 338.55 188.20 18 -210.35 -39.08
2018-2019 188.20 490.60 20 302.40 171.3
2019-2020 490.60 548.00 20 57.40 15.77
2020-2021 548.00 890.45 20 342.45 66.14
2021-2022 890.45 688.75 17 -20.17 -20.74

TOTAL RETURN 193.4

Average Return = 193.4/5 = 38.7

43
 GRAPHICAL PRESENTATION

COMPANY RETURN

WIPRO 3.8

ITC 42.7

DR.REDDY 12.6

ACC 47.8

BHEL 86.5

HEROHONDA 38.6

return

wipro
itc
dr.reddy
acc
bhel
herohonda

44
CALCULATION OF STANDARD DEVIATION:

Standard Deviation = Variance

__
Variance = 1/n (R-R)2

WIPRO:

Return Avg.
Year (R) Return (R) (R-R) (R-R)2
2017-2018 -27.41 3.8 -31.214 974.06
2018-2019 12.71 3.8 16.51 272.58
2019-2020 48.16 3.8 51.96 2,649.84
2020-2021 -21.84 3.8 -19.64 385.72
2021-2022 1.38 3.8 -2.42 5.85

TOTAL 4,288.05
_
Variance = 1/n (R-R)2 = 1/5 (4,288.05) = 857.61

Standard Deviation = Variance = 857.61 =29.28

ITC LTD:

Return Avg.
Year (R) Return (R) (R-R) (R-R)2
2017-2018 -7.67 42.702 50.37 2,537
2018-2019 69.25 42.702 26.5 702.25
2019-2020 31.7 42.702 -20 121
2020-2021 118.67 42.702 75.97 5,771.4
2021-2022 1.61 42.702 -41.09 1,688.39

TOTAL 10,820.04

Variance = 1/n (R-R)2 = 1/5 (10,820.04) = 2,164.008

Standard Deviation = Variance = 2,164.008= 46.5

45
DR. REDDY:

Return Avg.
Year (R) Return (R) (R-R) (R-R)2
2017-2018 -21.55 12.67 -28.22 796.37
2018-2019 6.89 12.67 -5.78 33.41
2019-2020 -23.63 12.67 -36.3 1,317.7
2020-2021 92.98 12.67 80.31 6,449.6
2021-2022 2.74 12.67 -9.93 98.6

TOTAL 8,696

Variance = 1/n-1 (R-R) 2 = 1/5 (8,696) = 1,739.2

Standard Deviation = Variance = 1,739.2= 41.7

ACC:

Return Avg.
Year (R) Return (R) (R-R) (R-R)2
2017-2018 -8.08 47.87 -55.95 3,130.4
2018-2019 86.71 47.87 38.84 1,508.5
2019-2020 44.34 47.87 -3.53 12.46
2020-2021 119.19 47.87 71.32 5,086.5
2021-2022 -2.8 47.87 -50.67 2,567

TOTAL 12,305

Variance = 1/n-1 (R-R)2 = 1/5 (12,305) = 2,461

Standard Deviation = Variance = 2,461 = 49.61

46
BHEL:

Return Avg.
Year (R) Return (R) (R-R) (R-R)2
2017-2018 34.4 86.65 -52.25 2,730
2018-2019 175.08 86.65 88.43 7,820
2019-2020 28.2 86.65 -58.454 3,416
2020-2021 193.9 86.65 107.25 11,502.5
2021-2022 1.69 86.65 -84.96 7,218.2

TOTAL 32,687

Variance = 1/n-1 (R-R)2 = 1/5 (32,687) = 6537.4

Standard Deviation = Variance = 6537.4 = 80.85

HERO HONDA:

Return Avg.
Year (R) Return (R) (R-R) (R-R)2
2017-2018 -39.08 38.7 -77.8 6,053
2018-2019 171.3 38.7 132.6 17,583
2019-2020 15.77 38.7 -22.93 525.8
2020-2021 66.14 38.7 27.44 752.95
2021-2022 -20.74 38.7 -59.44 3,533

TOTAL 28,448

Variance = 1/n-1 (R-R)2 = 1/5 (28,448) = 5689.6

Standard Deviation = Variance = 5689.6 = 75.4

47
 GRAPHICAL PRESENTATION

COMPANY RISK
WIPRO 29.28
ITC 46.5
DR.REDDY 41.7
ACC 49.61
BHEL 80.85
HEROHONDA 75.4

RISK

WIPRO
ITC
DR.REDDY
ACC
BHEL
HEROHONDA

48
CALCULATION OF CORRELATION:

Covariance (COV ab) = 1/n (RA-RA)(RB-RB)

Correlation Coefficient = COV ab/ a* b
WIPRO WITH OTHER COMPANIES
i. WIPRO (RA) & ITC (RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2017-2018 -31.21 50.37 -2172
2018-2019 16.51 26.5 437.5
2019-2020 51.96 -20 -571.5
2020-2021 -19.64 75.97 -1792
2021-2022 -2.42 -41.09 99.44
TOTAL -3099

Covariance (COV ab) = 1/5 (-3099) = -619.8

Correlation Coefficient = COV ab/ a* b
a = 29.3 ; b = 46.52
= -619.8/(29.3)(46.52) = -0.45

WIPRO WITH ITC

1000

500

0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2022
-500

-1300

-1500

-2000

INTERPRETATION:
Correlation Coefficient of Wipro and ITC for the years starting from 2017 to 2022 is -0.45.The
deviation for Wipro is very low -31.21 in the year 2017-2018, and high 51.96 in the year 2019-
2020.ITC deviation is very low -41.09 in the year 2021-2022 and very high 75.97 in the year
2020-2021.

49
ii) WIPRO (RA)&DR.REDDY (RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2017-2018 -31.21 -28.22 881
2018-2019 16.51 -5.78 -95.43
2019-2020 51.96 -36.3 -1886
2020-2021 -19.64 80.31 -2177.3
2021-2022 -2.42 -9.93 24

TOTAL -2654

Covariance (COV ab) = 1/5 (-2654) = -530.8

Correlation Coefficient = COV ab/ a* b
a = 29.3 ; b = 41.7
= -530.8/(29.3)(41.7) = -0.43

WIPRO WITH DRL

1500

1000

500

0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2022
-500

-1300

-1500

-2000

-2500

INTERPRETATION:
Correlation Coefficient of Wipro and DRL for the years starting from 2017 to 2022 is -0.43.The
deviation for Wipro is very low -31.21 in the year 2017-2018, and high 51.96 in the year 2019-
2020.DRL deviation is very low -36.3 in the year 2019-2020 and very high 80.31 in the year
2020-2021.

50
iii. WIPRO (RA) & ACC (RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2017-2018 -31.21 -55.95 1746
2018-2019 16.51 38.84 641
2019-2020 51.96 -3.53 -183
2020-2021 -19.64 71.32 -1700
2021-2022 -2.42 -50.67 122.6

TOTAL 926.6

Covariance (COV ab) = 1/5 (926.6) = 185.32

Correlation Coefficient = COV ab/ a* b

a = 29.28 ; b = 49.61
= 185.32/(29.28)(49.61) = 0.13

WIPRO WITH ACC

2000

1500

1000

500

0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2022
-500

-1300

-1500

-2000

INTERPRETATION:

Correlation Coefficient of Wipro and ACC for the years starting from 2017 to 2022 is 0.13.The
deviation for Wipro is very low -31.21 in the year 2017-2018, and high 51.96 in the year 2019-
2020.ACC deviation is very low -55.95 in the year 2017-2018 and very high 71.32 in the year
2020-2021.

51
iv. WIPRO (RA) & BHEL (RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2017-2018 -31.21 52.25 -2230
2018-2019 16.51 88.43 1460
2019-2020 51.96 -58.45 -3037
2020-2021 -19.64 107.25 -2106
2021-2022 -2.42 -84.96 205.6

TOTAL -5107

Covariance (COV ab) = 1/5 (-5107) = -1921

Correlation Coefficient = COV ab/ a* b

a = 29.3; b = 80.85

= -1921/(29.3)(80.85) = -0.43

WIPRO WITH BHEL

2000
1500
1000
500
0
-500 2011-2012 2012-2013 2013-2014 2014-2015 2015-2022
-1300
-1500
-2000
-2500
-3000
-3500

INTERPRETATION:
Correlation Coefficient of Wipro and BHEL for the years starting from 2017 to 2022 is -
0.43.The deviation for Wipro is very low -31.21 in the year 2017-2018, and high 51.96 in the
year 2018-2019.BHEL deviation is very low -58.45 in the year 2019-2020 and very high 107.25
in the year 2020-2021.

52
v. WIPRO (RA) & HERO HONDA (RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2017-2018 -31.21 -77.8 2428
2018-2019 16.51 132.6 2189
2019-2020 51.96 -22.93 -2091
2020-2021 -19.64 27.44 -539
2021-2022 -2.42 -59.44 143.8

TOTAL 3031

Covariance (COV ab) = 1/5 (3031) = 606.2

Correlation Coefficient = COV ab/ a* b

a = 29.3 ; b = 75.4
= 606.2/(29.3)(75.4) = 0.27

WIPRO WITH HERO HONDA

3000
2500
2000
1500
1000
500
0
-500 2011-2012 2012-2013 2013-2014 2014-2015 2015-2022

-1300
-1500

INTERPRETATION:
Correlation Coefficient of Wipro and HEROHONDA for the years starting from 2017 to 2022 is
0.27.The deviation for Wipro is very low -31.21 in the year 2017-2018, and high 51.96 in the
year 2019-2020.HEROHONDA deviation is very low -77.8 in the year 2017-2018 and very high
132.6 in the year 2018-2019.

53
. Correlation between ITC & other Companies:
i. ITC (RA) & DR REDDY (RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2017-2018 50.37 -28022 -1721
2018-2019 26.5 -5.78 -213.17
2019-2020 -20 -36.3 399.3
2020-2021 75.97 80.31 6101
2021-2022 -41.09 -9.93 408

TOTAL 5334

Covariance (COV ab) = 1/5 (5334) = 1066.8

Correlation Coefficient = COV ab/ a* b

a = 46.52; b =41.7
= 1066.8/(46.52)(41.7) = 0.55

ITC WITH DRL

7000
6000
5000
4000
3000
2000
1000
0
-1300 2011-2012 2012-2013 2013-2014 2014-2015 2015-2022

-2000

INTERPRETATION:
Correlation Coefficient of ITC and DRL for the years starting from 2017 to 2022 is 0.55.The
deviation for ITC is very low -41.09 in the year 2021-2022 and very high 75.97 in the year 2020-
2021. DRL deviation is very low -36.3 in the year 2019-2020 and very high 80.31 in the year
2020-2021.

54
ii. ITC (RA) &ACC (RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2017-2018 50.37 -55.95 -2818
2018-2019 26.5 38.84 1029
2019-2020 -20 -3.53 38.83
2020-2021 75.97 71.32 5418.19
2021-2022 -41.09 -50.67 2082

TOTAL 5750

Covariance (COV ab) = 1/5 (5750) = 1150

Correlation Coefficient = COV ab/ a* b

a = 46.52; b = 49.61
= 1150/(46.52)(49.61) = 0.5

ITC WITH ACC

6000
5000
4000
3000
2000
1000
0
-1300 2011-2012 2012-2013 2013-2014 2014-2015 2015-2022
-2000
-3000
-4000

INTERPRETATION:

Correlation Coefficient of ITC and ACC for the years starting from 2017 to 2022 is 0.5.The
deviation for ITC is very low -41.09 in the year 2021-2022 and very high 75.97 in the year 2020-
2021. ACC deviation is very low -55.95 in the year 2017-2018 and very high 71.32 in the year
2020-2021.

55
iii. ITC (RA) &BHEL (RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2017-2018 50.37 52.25 2632
2018-2019 26.5 88.43 2343
2019-2020 -20 -58.45 643
2020-2021 75.97 107.25 8148
2021-2022 -41.09 -84.96 3491

TOTAL 17257

Covariance (COV ab) = 1/5 (17257) = 3451.4

Correlation Coefficient = COV ab/ a* b

a = 46.52; b = 80.85
= 3451.4/(46.52)(80.85) = 0.92

ITC WITH BHEL

9000
8000
7000
6000
5000
4000
3000
2000
1000
0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2022

INTERPRETATION:

Correlation Coefficient of ITC and BHEL for the years starting from 2017 to 2022 is 0.92.The
deviation for ITC is very low -41.09 in the year 2021-2022 and very high 75.97 in the year 2020-
2021. BHEL deviation is very low -58.45 in the year 2019-2020 and very high 107.25 in the year
2020-2021.

56
iv. ITC (RA) & HERO HONDA (RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2017-2018 50.37 -72.8 -3667
2018-2019 26.5 132.6 3514
2019-2020 -20 -22.93 252.23
2020-2021 75.97 27.44 2085
2021-2022 -41.09 -59.44 2442

TOTAL 4626

Covariance (COV ab) = 1/5 (4626) = 925.2

Correlation Coefficient = COV ab/ a* b

a = 46.52; b = 75.4
= 925.2/(46.25)(75.4) = 0.26

ITC WITH HERO HONDA

4000
3000
2000
1000
0
-1300 2011-2012 2012-2013 2013-2014 2014-2015 2015-2022

-2000
-3000
-4000
-5000

INTERPRETATION:
Correlation Coefficient of ITC and HEROHONDA for the years starting from 2017 to 2022 is
0.26.The deviation for ITC is very low -41.09 in the year 2021-2022 and very high 75.97 in the
year 2020-2021. HEROHONDA deviation is very low -77.8 in the year 2017-2018 and very high
132.6 in the year 2018-2019.

57
3. Correlation Between DR REDDY & Other Companies

i. DR REDDY(RA) &ACC(RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2017-2018 -28.22 -55.95 1579
2018-2019 -5.78 38.84 -224.5
2019-2020 -36.3 -3.53 128
2020-2021 80.31 71.32 5728
2021-2022 -9.93 -50.67 503

TOTAL 7714

Covariance (COV ab) = 1/5 (7714) = 1543

Correlation Coefficient = COV ab/ a* b

a = 41.7 ; b = 49.61
= 1543/(41.7)(49.61) = 0.75

DRL WITH ACC

7000

6000

5000

4000

3000

2000

1000

-1300
2011-2012 2012-2013 2013-2014 2014-2015 2015-2022

INTERPRETATION:
Correlation Coefficient of DRL and ACC for the years starting from 2017 to 2022 is 0.75.The
deviation for DRL is very low -36.3 in the year 2019-2020 and very high 80.31 in the year 2020-
2021. ACC deviation is very low -55.95 in the year 2017-2018 and very high 71.32 in the year
2020-2021.

58
ii. DR. REDDY (RA) & BHEL (RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2017-2018 -28.22 52.25 -1774
2018-2019 -5.78 88.43 -511.1
2019-2020 -36.3 -58.45 2122
2020-2021 80.31 107.25 8613
2021-2022 -9.93 -84.96 843.6

TOTAL 9593.5

Covariance (COV ab) = 1/5 (9593.5) = 1919

Correlation Coefficient = COV ab/ a* b

a = 41.7 ; b =80.85
= 1919/(41.7)(80.85) = 0.6

DRL WITH BHEL

10000

8000

6000

4000

2000

0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2022
-2000

INTERPRETATION:

Correlation Coefficient of DRL and BHEL for the years starting from 2017 to 2022 is 0.6.The
deviation for DRL is very low -36.3 in the year 2019-2020 and very high 80.31 in the year 2020-
2021. BHEL deviation is very low -58.45 in the year 2019-2020 and very high 107.25 in the year
2020-2021.

59
iii. DR REDDY (RA) &HEROHONDA(RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2017-2018 -28.22 -77.8 2196
2018-2019 -5.78 132.6 -766
2019-2020 -36.3 -22.93 832.36
2020-2021 80.31 27.44 2204
2021-2022 -9.93 -59.44 590

TOTAL 5056

Covariance (COV ab) = 1/5 (5056) = 1011

Correlation Coefficient = COV ab/ a* b

a = 41.7 ; b = 75.4
= 1011/(41.7)(75.4) = 0.32

DRL WITH HEROHONDA

2500

2000

1500

1000

500

0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2022
-500

-1300

INTERPRETATION:
Correlation Coefficient of DRL and HEROHONDA for the years starting from 2017 to 2022 is
0.32.The deviation for DRL is very low -36.3 in the year 2019-2020 and very high 80.31 in the
year 2020-2021. HEROHONDA deviation is very low -77.8 in the year 2017-2018 and very high
132.6 in the year 2018-2019.

60
4. Correlation With ACC & Other Companies
i. ACC (RA) & BHEL(RB)

___ __ __ __
YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)
2017-2018 -55.95 52.25 -2923.4
2018-2019 38.84 88.43 3435
2019-2020 -3.53 -58.45 206.3
2020-2021 71.32 107.25 7649
2021-2022 -50.67 -84.96 4305

TOTAL 12,672
Covariance (COV ab) = 1/5(12,672) = 2534

Correlation Coefficient = COV ab/ a* b

a = 49.61: b = 80.85
= 2534/(49.61)(80.85) = 0.63

ACC WITH BHEL

10000

8000

6000

4000

2000

0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2022
-2000

-4000

INTERPRETATION:

Correlation Coefficient of BHEL and ACC for the years starting from 2017 to 2022 is 0.63.The
deviation for ACC is very low -55.95 in the year 2017-2018 and very high 71.32 in the year
2020-2021. BHEL deviation is very low -58.45 in the year 2019-2020 and very high 107.25 in
the year 2020-2021.

61
ii. ACC AND HEROHONDA

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2017-2018 -55.95 -77.8 4353
2018-2019 38.84 132.6 5150
2019-2020 -3.53 -22.93 80.9
2020-2021 71.32 27.44 1957
2021-2022 -50.67 -59.44 3012
TOTAL 14553

Covariance (COV ab) = 1/5 (14553) = 2911

Correlation Coefficient = COV ab/ a* b
a = 49.61; b = 75.4
=2911/(49.61)(75.4)=0.78

ACC WITH HERO HONDA

6000

5000

4000

3000 O

2000

1000

0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2022

INTERPRETATION:
Correlation Coefficient of HEROHONDA and ACC for the years starting from 2017 to 2022 is
0.78.The deviation for ACC is very low -55.95 in the year 2017-2018 and very high 71.32 in the
year 2020-2021. HEROHONDA deviation is very low -77.8 in the year 2017-2018 and very high
132.6 in the year 2018-2019.

62
CORRELATION BETWEEN BHEL(RA) &HERO HONDA(RB)

YEAR (RA-RA) (RB-RB) (RA-RA) (RB-RB)

2017-2018 52.25 -77.8 -4065.05
2018-2019 88.43 132.6 11726
2019-2020 -58.45 -22.93 1340.25
2020-2021 107.25 27.44 2943
2021-2022 -84.96 -59.44 5050

TOTAL 16,994.25

Covariance (COV ab) = 1/5 (16,994.25) = 3398.85

Correlation Coefficient = COV ab/ a* b

a = 80.85; b = 75.4
= 3398.85/(80.85)(75.4) = 0.55
BHEL WITH HERO HONDA

14000
12000
10000
8000
6000
4000 O
2000
0
-2000 2011-2012 2012-2013 2013-2014 2014-2015 2015-2022

-4000
-6000

INTERPRETATION:
Correlation Coefficient of BHEL and HEROHONDA for the years starting from 2017 to 2022 is
0.55.The deviation for BHEL is very low -58.45 in the year 2019-2020 and very high 107.25 in
the year 2020-2021. HEROHONDA deviation is very low -77.8 in the year 2017-2018 and very
high 132.6 in the year 2018-2019.

63
DISPLAY OF ALL CALCULATED VALUES

COMBINATION CORRELATION COVARIANCE

WIPRO & ITC -0.45 -619.8
WIPRO & DR.REDDY -0.43 -530.8
WIPRO & ACC 0.13 185.32
WIPRO & BHEL -0.43 -1921
WIPRO &H.HONDA 0.27 606.2
ITC & DR.REDDY 0.55 1066.8
ITC &ACC 0.5 1150
ITC &BHEL 0.92 3451.4
ITC &HEROHONDA 0.26 925.2
DR.REDDY & ACC 0.75 1543
DR.REDDY & BHEL 0.6 1919
DR.REDDY & H.HONDA 0.32 1011
ACC & BHEL 0.63 2534
ACC & H.HONDA 0.78 2911
BHEL & H.HONDA 0.55 3398.85

64
 CHAPTER-5

FINDINGS

AND SUGGESTIONS,

CONCLUSIONS

65
FINDINGS

The analytical part of study for the 5 years reveals the following as for as:

 As far as the average return of the company is concerned ITC(42.702)

ACC(47.87) BHEL(86.65) is high with an average return of 59% followed
by WIPRO(3.8) DR.REDDY(12.67) HEROHONDA(38.7) securities are
performing at medium returns with average return of 18%.

 As far at the Standard Deviation is concerned with BHEL(80.85) is at highly

risk security and next high securities is HERO HONDA(75.4) and ITC( 46.5),
DR.REDDY(41.7) and ACC(49.61) are performing with moderate risk and
other securities are performing with low risk.

 As far as the correlation is concerned the securities WIPRO and

DR.REDDY (-0.43) are high correlated with minimum portfolio risk. The
investor who is risk averse will have to invest in this combination which
gives good return with low risk.

66
SUGGESTIONS

 As the average return of securities BHEL ACC and HEROHONDAIS

HIGH, it is suggested that investors who show interest in these securities
taking risk into consideration.

 As the risk of the securities ACC BHEL HEROHONDA are risky securities
it suggested that the investors should be careful while investing in these
securities.

 The investors who require minimum return with low risk should invest in
WIPRO & DR.REDDY.

 It is recommended that the investors who require high risk with high return
should invest in BHEL and HEROHONDA.

 The investors are benefited by investing in selected scripts of Industries.

67
CONCLUSION

The investors who ae risk averse can invest their funds in the portfolio combination of
WIPRO, ITC, DR.REDDY, ACC, BHEL, HEROHONDA companies are in the
proportion. The investors who are slightly risk averse are suggested to invest in WIPRO,
DR. REDDY, ITC & ACC as the combination is slightly low risk when compared with
other companies.

The analysis regarding the compaines BHEL, ACC, ITC AND HEROHONDA has
showed a wise investment in public and in private sector with an increasing trend where
as corporate sector has recorded a decreasing trends income which denotes an increasing
trend throught out the study period.

68
BIBLIOGRAPHY

69
 BIBILOGRAPHY
Books

1. SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT

-donald.E.Fisher, Ronald.J.Jordan

2. INVESTMENTS
-William .F.Sharpe, gordon,J Allexander and Jeffery.V.Baily

3. PORTFOLIOMANAGEMENT -Strong R.A

WEB REFERENCES

http;//www.nseindia.com
http;//www.bseindia.com
http;//www.economictimes.com
http;//www.answers.com

70